Budgeting For 2011? Look Beyond Lead Generation.

I’ve been involved in a couple of LinkedIn B2B Lead Generation Roundtable Group discussions over the past week, both centered in one way or another around the importance of balancing lead generation programs – and budgeting – with lead nurturing activities.  The first discussion has centered on ways in which companies can improve the alignment between sales and marketing, a topic we’ve covered in this blog and in our white paper, Lead Nurturing and the Role it Plays in Sales Development.  Much of the conversation has focused on increasing the dialogue between the two groups so both parties become more closely aligned on the same end game – increasing sales and profitability.  Many of us have commented that the first step toward doing this is to pay more attention to the process.  The selling process, and even more importantly, the customer’s buying process.

The second discussion was started by someone who asked whether we thought it was “worth” more to invest marketing dollars in lead generation or lead management and nurturing.  As B2B marketers are busy budgeting for 2011, this is certainly a very timely topic.  So which is it?  The simple answer is that both are important and, thus, should be appropriately funded.  But when push comes to shove and management has rejected your first round of budgeting, what are you going to cut in round two?

As a long-time media guy, I’ve planned more lead generation campaigns than I care to remember, so I certainly understand the desire to keep new names flowing into the funnel, but if it were my money, I would forego my lead gen activities for as long as it took to develop and implement a lead management/nurturing program.  It just makes good business sense.  Studies by Gartner, Forrester and a host of others indicate that anywhere between 70% and 95% of the “leads” you generate are not ready to buy your product or service when they enter your system.  Most of these people will buy, but they will do it when they are ready; after they have completed their buying process.  But your sales team is focused on hitting its numbers, and rightfully so.  So they don’t have the time or interest to hold the prospect’s hand along the way.  They want to focus on the few that have an immediate need.  The rest fall through the sales funnel into what we call the non-qualified lead dead pool.  So, 75 of every 100 leads marketing works so hard and spends so much money generating end up getting dumped out the other end.  And you’re back to square one, allocating more budget to generate more leads that are going to fall through the system into the dead pool.

So as your budgeting for 2011, consider the following results other companies are realizing through their lead nurturing efforts:

• Lead nurturing generates 20% more sales opportunities.  – DemandGen (lead nurturing consulting firm)
• 7% points higher win rates on marketing-generated leads.  — CSO Insights (sales consulting firm)
• 100% increase in bid-to-win ratios and 47% higher average order values.  — Aberdeen Group
• 48% of all deals coming from lead nurturing. 50% more sales-ready leads from lead nurturing.  — Marketo
• 60% of senior-level marketing executives using lead management automation indicate better leads as a result, and a more robust sales pipeline.  — Forrester Consulting

Last night, I grilled some hamburgers for dinner, and I don’t know about you, but for me, a hamburger isn’t complete without some goodies on top.  So, I walked over to our garden and plucked a nice big beefsteak tomato and some fresh onions.  It’s so nice to have a garden full of fresh fruit, herbs and vegetables.  But doing so takes some effort.  You can’t just put a bunch of plants in the ground and expect to be harvesting in a few weeks.  You have to water and fertilize the plants as they grow.  You need to tend to the garden, supporting the healthy plants and prune the others.  If you do, you’ll be eating well throughout the summer and early fall.  If you don’t, you’ll be spending more of your money buying additional seeds, plants and groceries to replace the ones that died on the vine.  A little nurturing not only keeps you healthy, it can save you some money down the road.